Investment deal a threat to our economic nationalism

By Richard Gwyn, Citizens Democratic Watch
30 December 1997

"We are writing the constitution of a single global economy." Renato
Ruggiero, Director-General, World Trade Organization (WTO).

HE'S ABSOLUTELY right. The rules for the free passage of goods and services
across national boundaries that Ruggiero administers as the head of the
international trading body, the Geneva-based WTO, add up to the equivalent
of a constitution.

A constitution, though, decisively different from the constitutions most of
us are familiar with. All of these are concerned with "the people" or
"the citizen," whose rights, freedoms responsibilities are set out in each
constitution's clauses (also, in the instance of federal states like Canada,
the respective rights and responsibilities of different levels of government).

The concerns of the constitution Ruggiero was referring to, though, are
those of an abstraction - the global economy. People, and citizens, ought to
benefit because the more effectively the global economy runs, the wealthier
everyone ought to be.

People, as such, though, are not the concern of economic constitutions such
as the 1988 Canada-U.S. free trade pact, since morphed into NAFTA, to
include Mexico.

Abstractions are just that - abstractions, remote, impersonal, distant.
It's difficult for ordinary people to relate to them. As well, anything
international has about it an aura of glamour, of grandeur, of an
inevitability, before which ordinary people should set aside their
commonplace worries for the sake of the global good.

This is the case with another economic constitution now being negotiated
and which, once completed, will almost certainly be handed over to the WTO
to administer.

It's called the MAI - Multilateral Agreement on Investment. Now being
completed by the 29 industrial countries of the OECD (Organization for
Economic Co-operation and Development), it will set the rules for all global
investors. In essence, these rules will require all countries to treat
foreign investors in exactly the same way as they treat their domestic
companies.

No more economic nationalism, therefore, and, increasingly, less and less
ability for each nation-state to protect distinctive local interests
(cultural, environmental, and the rest) any differently from the way these
are treated globally, since without uniformity there can be no "single
global economy," as in Ruggiero's words.

As yet, this second global economic constitution has attracted almost no
public interest. The Council of Canadians, headed by Maude Barlow, has
attacked it and has issued a critique by Toronto trade lawyer Barry Appleton.

Having pondered the MAI for some time, I can think of only one way to make
it real for non-experts.

This is to think of it as a charter of rights for absentee landlords.

That's what foreign investors and multinational corporations are. They
locate their plants, or offices, in Thailand or Mexico or Canada, or
wherever. But they have no roots in these countries or any loyalty to them ,
much in the manner of pre-industrial absentee landlords who just happened to
own some fields or forests in this or that part of their country.

How necessary and productive and creative is it to be applying our talents
and political energies to making the world safe for absentee landlords, as
Canada is doing as one of the most active promoters of the MAI?

The MAI's specific purpose is to make the world as safe as possible for
these abstractions, for the first time in international law, for it grants
multinational corporations the right to sue governments for alleged breaches
of the MAI "which cause, or are likely to cause, loss or damage to the
investor." These cases, to be decided by a panel of three judges, one
chosen by the corporation, a second by the nation-state government, the
third neutral, would determine "compensatory monetary damages . . . or any
other form of relief," and would do this on the basis on the terms of the
MAI treaty itself rather than of the national laws of the country in question.

As significant, while the MAI spells out the rights of absentee landlords,
such as "an absolute guarantee (to) be compensated for an expropriated
investment," it provides for no equivalent responsibilities or obligations
for multinational corporations to meet environmental standards, local
employment, export quotas, local purchasing. Indeed, the treaty appears to
prohibit these being applied to foreign investors even when required by
national law of domestic companies.

Of course, like all countries, we want foreign investment. Of course, as
MAI supporters keep saying, governments can enter "reservations" about
areas of national activity - like culture - that they want exempted (a
questionable protection, in fact, since disputes will have to be settled by
MAI rules, and judges).

The real question is whether we really want to turn our country over to
absentee landlords. That's what we're doing, without the public being told.

Richard Gwyn usually writes Sunday, Wednesday and Friday. His Internet
address is gwyn@inforamp.net